Entrepreneur, visionary & fascist, Henry Ford changed the world of the early twentieth century.
Before Henry Ford released the Model T, three out of four Americans lived and worked in the country. By the time the last Model T had been sold 19 years later, three out of four Americans lived and worked in the city.
Henry Ford was born to Irish protestant immigrant parents in 1863. His harsh protestant upbringing fostered a priggish respect for hard work, abstinence and prudery which would accompany him throughout his life.
Ford’s mother was a rigid disciplinarian, and Henry coped by withdrawing into his own little world; the locals called him a ‘queer duck.’
Henry didn’t enjoy farm work and did his chores grudgingly, but he did enjoy playing with gadgets and machinery, attempting to master a world of mechanics, where everything is known and controllable. Ford’s fascination with gadgets was seen as acceptable by his father because a man who could fix machinery was always useful around the farm, but Henry’s father was totally opposed to machinery being a career in itself. Ford senior believed that a good protestant son should stay on the farm and work the land. Engines and machinery were part of the sinful city culture that any strong Christian should avoid, along with loose women, liquor and gambling.
When Henry was thirteen, his mother died after giving birth to her ninth child. Faced with an out-of-control universe, kids tend to swing one of two ways at this point: they either withdraw into their own fantasy world or they become utter control freaks. Ford did both.
Ford blamed his father for his mother’s death, and as his father drank to drown his sorrows, Henry’s hostility grew darker.
Henry’s world changed forever, once more, when he saw a self-propelled steam engine chugging down the road towards him. He leapt off his father’s cart and besieged the engine driver with questions. From that point on, Henry knew exactly what he wanted from life and from then on he was on an inevitable collision course with his father.
Ford’s father’s disapproval didn’t stop Henry’s fascination with gadgets, but Ford senior did succeed in causing great conflict and guilt within the young man. For the rest of his stay on the farm Henry was simply serving time and on his seventeenth birthday he took a walk and kept going all the way to Detroit.
Henry soon found a niche for himself in the growing industrial world of Detroit and within a few years he had a secure job as an engineer. However, his passion for self-propelled vehicles ran unabated and on June 5, 1896, Henry took his new wife Clara for a ride in the first Ford car, built in a shed beside their rented house.
Ford had no trouble attracting investors who wanted to help him build cars commercially, but Henry had big problems getting his backers to see the big picture. Ford’s investors wanted to produce slightly refined versions of Ford’s existing cars, end of story. Ford himself, however, knew the inadequacies of his existing experimental models, and knew the need to pour money into further research and development. Moreover, Ford saw that the real market for cars wasn’t in hand-built models for the rich, but for mass-produced, reliable vehicles for farmers, doctors, teachers and the like, who had to travel regularly and thus needed an affordable, reliable means of transport.
After racing success punctuated by commercial failures, Henry finally got backers who would cut him some slack and leave him to develop his own car in his own way.
Contrary to popular belief, Ford did not design his own cars like the Model T; rather, he hired several talented engineers and coordinated their efforts.
Ford’s first commercial model was the Model A (he later used the same name for a different vehicle). The Model A’s engines were built by the fiery Dodge brothers and delivered by horse and cart to the Ford factory. Although the price of the Model A was a high $850, the vehicles sold well from the start. Ford was soon a paper millionaire.
Working with his chief engineer C.H. Wills, Ford continued his research and development, modifying the Model A into Models N, R & S. Work on the Model T began in 1906, and it was finally released in March of 1908.
Basic and reliable, yet streets ahead of the competition in terms of affordable technology, the Model T was the first car that captured national attention in America.
Ford was an excellent problem-solver, but his great talent was in picking useful innovations developed by his employees, implementing them and then implying that he came up with the ideas in the first place.
Even Ford’s most famous innovation – the modern assembly line – was the work of others. The concept came from Frederick W. Taylor, whose classic time-and-motion studies made him the darling of American industry. The man who put Taylor’s ideas into action at Ford was Ford’s plant superintendent Charles E. Sorensen. As early as 1908 Sorensen and fellow workers had had the idea of pulling cars along on a rope as they were assembled.
These ideas came to fruition at Ford’s huge Highland Park factory, where Sorensen developed the assembly line system based around a belt conveyor which carried the vehicle from one line of workers to the next.
Early 20th century Detroit was an employer’s paradise. There was little organised bargaining for wages and the police would happily hire themselves out as strikebreakers. Thus, while Ford was paying market rates for his workers, they were often on the edge of poverty and generally viewed a job at the Ford plant as a stopgap measure until something better came along. By 1913 the Ford Motor Company was hiring 963 workers for every 100 it kept on the payroll. Although he was paying his workers, on average, only $2.50 per day, Ford Motor Co was spending $3 million a year training replacements. Something had to change.
Henry Ford’s friend and general manager, James Couzens, came up with the innovative idea of paying the workers enough to keep them from leaving. $5 a day, said Couzens. Henry, himself a multimillionaire, countered that $3 a day was more than enough, then a few days later he grudgingly agreed to $4 before eventually caving in to Couzen’s insistence. Finally, in January 1914, Ford doubled the wages of his workers to an unheard-of $5 a day. Ford was swamped with job applications and absenteeism dropped from 10% to 0.5%.
People stood in freezing conditions looking for work and wouldn’t leave until the police sprayed them with fire hoses.
The Model T – which made reliable motoring accessible to the masses – had already made Ford seem like a hero to many people. However, by doubling his employees’ wages (actually a cost-saving move), Ford was hailed as a hero of the working man. That was the popular view, at least. The Wall Street Journal attacked Ford for his move, calling it blatantly immoral, a misapplication of Biblical principles in a field where they didn’t belong.
Ford was later to lower his workers’ wages once more as the Great Depression bit hard, but his image as friend of the working man has been surprisingly resilient. Ford Motor Co has always had its greatest successes supplying affordable cars to ordinary people, while its various attempts at selling luxury cars have generally been a disaster.
The 1920s in America began and ended with economic slumps, both of which threatened Ford. Henry weathered the first storm by slashing the prices on the Model T to $395, which was less than it cost to produce, and by forcing his dealers to buy unwanted cars. It was touch-and-go; Ford ended the year with a $50 million loss, but he survived.
Ford’s second crisis came towards the end of the decade as the Model T, once the largest selling vehicle in the world, became obsolete. On May 25, 1927, newspapers across America carried the news that the Model T was to be discontinued. Such was Ford’s charisma that the public patiently waited seven months while the entire Ford production facility was shut down and retooled.
There were no announcements from Ford, no advance pictures, nothing, yet speculation on the new Ford reached fever pitch as the year progressed. Half a million Americans paid deposits on the new Ford sight unseen. The new Ford – the Model A – was finally released in December of 1927 and ten million people saw the car within 36 hours of its release. The model A clocked up one million sales in 16 months, although even a million sales was still not enough to regain the market share that Ford had lost to the likes of General Motors.
The Model A was not a technically advanced machine, but it plodded along reliably and kept up with the other models on the road, so it was well received. Improvements continued on the Model A as the years went by and the A was produced in seemingly countless variations. The Model A was later given cosmetic changes and rebadged as the Model B, but it always remained the A as far as the public were concerned.
V8 engines, with their promise of both power and economy, had been around for a long time, but they were difficult to mass produce. Ford overcame substantial technical problems to produce the first Ford V8, which in various forms was to power much of the American Ford range for decades.
Henry Ford’s heroic status among the working classes is ironic when you consider how he treated his own staff. Henry had the habit of walking through his company’s accounting department and periodically asking his aides: “What do these people do?”, and when told that those people were accountants, firing the lot of them.
Ford’s ‘Sociological Department’ visited Ford employees to ensure that they were suitably virtuous in their home lives. Ford investigators demanded to see bankbooks and marriage certificates, and required employees to reveal all personal details. Investigators left behind booklets entitled Rules of Living, encouraging employees to use plenty of soap and water in the home, not to spit on the floor, drink or take in boarders.
Ford Motor Co had its own private army run by Harry Bennett, a short, pugnacious boxer with extensive organised crime connections. Bennett and his thugs ran Ford’s ‘Service Department’. Their job was to protect the paranoic Ford and his family, and also to spy on Ford’s workers.
Henry Ford saw trade union organisation as just another example of Jewish conspiracy:
“Unions are organised by Jewish financiers, not labour. A union is a neat thing for a Jew to have on hand when he comes around to get his clutches on industry.”
Ford’s biography: The Fords: an American Epic describes how Ford protected his plant from the taint of ‘Jewish conspiracy’:
“Henry’s reaction to the labour movement was to make [the factory complex] into an industrial concentration camp overseen by Bennett’s army of Service Department men. They followed workers into washrooms to make sure they didn’t talk about union matters; they demanded that someone walking from one place to another tell them where he was going and why. While workers were at their benches their lunch pails and overcoats were ransacked for union literature... There was no sitting, squatting, singing, talking or whistling on the job. Smiling was frowned upon... Anyone even suspected of being a [union] sympathiser was not only summarily fired but usually beaten up as well.”
Bennett’s techniques were brought to the attention of the world when his goons – with the full support of Henry Ford – attacked a group of trade unionists who had the cheek to give out leaflets outside a Ford plant. In addition to beating the snot out of the unionists, the goons decided that uninvolved bystanders were probably unionists as well, and the bystanders were attacked too. One church minister, who had come along to observe, had his back broken.
Ford’s greatest efforts, however, were reserved for the world at large. As Eric Taub, author of Taurus, the making of the car that saved Ford put it:
“Ford’s belief that he knew best how his workers should run their lives was part of a grander notion that he knew best how the world should be run. He was a stubborn man and, like most stubborn people, he never let his ignorance stop him from voicing his beliefs. His semiliterate writing style and intolerance of minorities would have been laughable had he been an inconsequential man. As one of the world’s most powerful industrialists, people listened to his prattle...The German Jewish international bankers were responsible for starting World War I, he asserted... He purchased his local newspaper, the Dearborn Independent, and turned it into a nationally distributed publication advocating racism and anti-Semitism. Over 750,000 copies of each issue were printed, and Ford forced his car dealers to distribute them to their customers...
The collected writings in the newspaper were later published as The International Jew: The World’s Problem: ‘The Jews are the conscious enemies of all that the Anglo Saxons mean by civilisation’, the pamphlet declared. It was widely read throughout Germany, Russia, Portugal and Brazil. Henry Ford holds the [dubious] distinction of being the only American to be praised in Hitler’s biography Mein Kamph. Hitler’s youth leader, Baldur von Schirach, stated that he became an anti-Semitic after reading The International Jew.”
It is quite possible that Ford’s meddling was indirectly responsible for World War II.
At a time when the German Nazi party was still a tiny bunch of nutters raving on Munich street corners, Ford is believed to have provided considerable amounts of finance to the fledgling party, enabling the Nazis to gain their stronghold on Germany. It is notable that even after the horrors of the Nazi era were exposed following World War II, Ford never denied financing Hitler.
Henry deserves some credit for trying to improve the lot of others. He regularly picked up tramps and hitchhikers, offering them jobs in his factory so that they could ‘remake their lives’. He hired ex-cons in an attempt to reform them through honest hard work. Sometimes it worked. One ex-con, Norval Hawkins, went on to become Ford’s most brilliantly successful sales manager (he was later fired during one of Henry’s paranoic purges).
Years after Henry was dead, his son, Henry II, met Negro civil rights campaigner Whitney Young who told Henry II how his father had been hired by Ford at a time when few blacks got decent jobs. Influenced by old man Henry’s constant lectures about thrift and self-betterment, his father had saved enough to go to college at night and eventually become a successful teacher.
As Henry Ford senior grew older he became increasingly mad, and relied more and more on the thug Bennett, who increasingly gathered power around himself so that he was second only to the erratic Henry. Although Henry’s son Edsel was in theory the general manager of the Ford Motor Company, he spent his life under the humiliating thumb of his father and died a broken man in 1943, aged 49.
Ford Motor Company was by then mostly run by Bennett himself and was close to collapsing into chaos. Edsel’s son – Henry Ford II – saved the company. Backed by the women of the family he finally forced Henry Ford senior to relinquish control of the huge empire he had founded. It was just as well. By the time Henry II took over, the Ford Motor Co was losing around $1million a day and hadn’t made a profit in 15 years. Henry Ford senior had left millions of dollars deposited in non-interest-bearing accounts all over Michigan. Worse were the bookkeepers who kept piles of bills up to 1250mm high and estimated how much the company owed by measuring the pile with a ruler.
Henry II soon realised that he simply did not know enough to turn around the ailing company. Luckily, he was approached by a group of brilliant ex-air force officers nicknamed the Whizz Kids. This group had revolutionised the Air Force’s concept of strategic bombing during World War II and were now looking to apply those same management skills to private enterprise. Henry Ford II, taking the biggest gamble of his life, agreed to hire them.
With the help of the Whiz Kids, Henry II hired hundreds of top executives from General Motors and gradually brought Ford back from almost certain bankruptcy.
Ford Motor Co was eventually made a public company in 1956, and people lined up to buy shares in the American dream. It was the biggest stock issue in history.
Henry Ford senior, now a sad and confused old man, died on the evening of April 7,1957. The world that had forgotten him suddenly paused for a moment and paid tribute to the man who had changed everything. Ford’s body lay in state at the Henry Ford Museum and over 100,000 people filed past it. Tributes flowed in from around the world, even from Soviet Russia.
Henry II could not have been more different from his grandfather. Whereas his grandfather saw trade unions as a plot, Henry II saw them as an integral part of industrial life and signed mutually profitable deals with them. Henry II was instrumental in organising a group of industrialists who agreed to hire long-term unemployed from Detroit’s slums, with a 60% success rate.
Meanwhile, a Ford Motor Co freed from the influence of its founder launched into a series of new cars for all price ranges. However, as they moved the range upmarket, they committed the cardinal mistake of assuming that the 1950s boom would last forever. It didn’t, and the release of the Edsel was among the most disastrous events in Ford’s history. It was expensive at a time of economic recession. It was gaudy to the point of ugliness; worst of all, it had serious quality problems. Despite encouraging reviews in the second year of its release, the Edsel was canned having lost Ford around US$350million. Henry II drifted away from the company and towards alcoholism. His place, in all but name, was taken by the legendary Robert McNamara.
McNamara, with his thick-lensed glasses and cold temperament, had no interest in cars. McNamara was a bean counter. Cars were just another product to him. He was horrified by how much petrol his company’s cars guzzled so he commissioned a new and surprisingly successful car, the Falcon.
It is intriguing to speculate how long Ford would have lasted under McNamara’s leadership, but president Kennedy offered him the job of head of defence, and McNamara took it, eventually being partially responsible for the Vietnam War debacle. In the meantime Ford, under McNamara’s influence, had canned its luxury models, meaning it was unable to take advantage of the brief economic boom of the Kennedy years.
McNamara’s place was taken by a rising young star, Lee Iacocca. Iacocca alone was responsible for the company’s direction through the 1960s. At a time when Ford was paralysed by lack of direction, Iacocca gave the Ford range his own personal style. Iacocca tarted up the dowdy Falcon and developed the legendary (and rather unsafe) Mustang, naming it after a World War II fighting plane. The Mustang sold 410,000 units in its first year of production, making Iacocca the darling of the automotive press.
Henry II made a comeback and began to consolidate the international empire. By 1970 the Ford Motor Co was reporting sales of US$15billion a year, much of it from overseas sales. Despite tension among the top managers, Iacocca continued to shine. His Ford Maverick was another hit with the market, propelling Iacocca towards superstardom.
Iacocca, the Italian immigrant’s son who made good, didn’t just sell the American dream, he lived it. He proposed that Ford buy Ferrari, and only Enzo Ferrari’s stubborn refusal to sell his racing cars along with the rest of the company stopped the deal going through.
Iacocca even temporarily broke Ford Motor Co’s losing streak on upmarket models. Iacocca knew that the American dream for the common man meant being able to afford a car that was bigger and more garish than his neighbour’s. Thus, Iacocca put a new body on the existing Ford Thunderbird and called it the Lincoln Continental Mark III. Despite the sneers that it looked like a Mafia staff car, the new Continental outsold Cadillac’s El Dorado and made a fortune for Ford. The Lincoln Continental screamed “I’ve made it” for an affluent generation of successful real estate entrepreneurs, waterbed store owners and drug dealers.
The problem was, Iacocca was the hero in an American dream where every working man could afford a car and petrol was cheap. In 1973, the fourth Arab-Israeli war broke out. Petrol rocketed in price and Iacocca’s big gas-guzzlers became white elephants over night. The fuel crisis had hit.
American carmakers simply couldn’t think small, and Iacocca was at least as bad as any other car industry leader. Cars weren’t wimpy small Japanese runabouts, cars had V8 engines and racing stripes. Cars were for men. Thus, Iacocca persuaded Ford to blow millions of millions on the De Tomaso, an Italian supercar of such poor quality that six of the cars broke up when the Ford test drivers took them onto the test track.
The writing was on the wall for Iacocca when he had the company buy a US$1.5million executive jet, then spent $3.5million on upgrading it to his high standards. This at a time when Ford Motor Co was haemorrhaging money like a waterfall.
Thus, even when Ford produced a ‘small’ car, it was the explosive, overweight and underpowered Pinto. America’s motoring journalists were normally supportive and loyal to Ford, but they hated the Pinto, and with good reason.
It was typical of Iacocca that he would have let the Pinto go into production knowing that it was unsafe. Iacocca was a product man, meaning that the role of a car was to boost your ego and get you from A to B in reasonable style. If you hit something on the way, that was your problem. Thus, when Ford accountants told him that the Pinto was liable to burst into flames if hit from the rear, it came down to straight dollars and cents. The beancounters estimated that around 180 people would die as a result of the Pinto’s fuel tank defects, with another 180 being severely burned. The sum paid out to grieving relatives after their families caught fire would be around $49.5million, they thought, whereas the cost of redesigning the Pinto’s fuel tank would be around $137million. Thus, the Ford Motor Co would save nearly $90million by letting people fry in car accidents. So Iacocca said, in effect: “Start the assembly lines, we’ll sell the Pinto as is.”
After public exposure of the Pinto’s faults, Ford was forced into a major damage control exercise. First to go was the radio ad that ended: “Pinto leaves you with that warm feeling.” Ford was eventually forced to recall 1.5 million vehicles for repairs.
Iacocca’s days were numbered, but he wouldn’t go without a fight. After being demoted to the company’s number three executive position in 1977, then fourth in 1978, he waged an all-out fight for supremacy with Henry Ford II, and lost. Iacocca went off to save a bankrupt Chrysler corporation with government money, leaving the Fords in charge of the Ford empire once more.
1979 found the Ford families in disarray, with divorces, affairs, tragic deaths and conflict making headlines around the world. As if that wasn’t bad enough, the Ford Motor Co was being sued on all sides, notably by victims of burned Pinto cars. In 1980 Henry Ford II stepped down from the board of directors. His last few years had been spent stabilising the company, and he left it in better shape than he found it.
However, the overall American car industry was a mess. When Henry II took over Ford, America produced 80% of the world’s cars. By the time he left America produced 28%. The Japanese invasion had begun. Ironically, the Japanese were using the same techniques Henry Ford senior had used with the Model T: make a simple, reliable, compact car and sell millions of them at a low profit. It worked for Henry and it worked for the Japanese.
With the high cost of petrol during president Carter’s years, Ford Motor Co lost $1.5billion in 1982. Quality of products was poor and the company was still trying to find a way to fight effectively against the nightmare of Japanese imports. What the American manufacturers couldn’t understand was that the American public was buying Japanese cars, not just because they were smaller and more economical, but because they were better-built and more reliable. Realising that the Japs were here to stay Ford bought 25% of Mazda in 1983 (later increased to 33.39%).
When Iacocca left Ford he boasted that Ford would never again see a profit of $1.5billion, yet by 1983 the company posted a profit of $1.9billion, growing to $3.3billion in 1986. Ford also beat General Motors in sales for the first time since 1924. All this was arguably the legacy of Henry Ford II.
The ’90s saw the Ford Motor Company beginning to act as one global unit. A new member of the Ford family – William Clay Ford – was now chairman of the Ford Motor Co. However, the real power lay with Ford chief executive officer Jacques Nasser. Nasser believed that it didn’t matter who actually built the cars, as long as they were controlled by Ford and sold as Fords. Nasser was nicknamed “Jacques the knife” for his widespread firing of Ford employees.
Nasser himself was fired a couple of years later. Not only was Ford’s market share plummeting, but the rollover-prone Ford Explorer forced the Ford Motor Company into damage control mode once more.
William Clay Ford stepped into Nasser’s shoes. He tried hard to turn the Ford Motor Co into an environmentally-responsible company with a caring attitude towards the community.
The insane American financial bubble of the 1990s, combined with cheap fuel and a public craze for huge SUVs, made Ford Motor Co very rich and very careless. Ford went on a spending spree, buying up dozens of companies, including Aston Martin, Jaguar, Land Rover and Volvo.
After the party came the hangover. High oil prices combined with high domestic costs and a burst economic bubble saw the entire Ford empire falling apart. In 2008, Ford lost US$14.6 billion. Ford was forced to sell Aston Martin, Jaguar, Land Rover and Volvo, having lost billions on its investments. Ford’s 33% share in Mazda was reduced to 13.4% then, recently, to just 3.5%.
Ford narrowly avoided bankruptcy, but it’s not out of the water yet. On paper, Ford is currently profitable, but is still heavily in debt. Ford’s investments in developing countries, especially China, are vulnerable to any downturn in the global economy. The U.S. government would never let Ford Motor Co actually die, but it’s still vulnerable to massive restructuring.
Ford’s Australian assembly plants, which have been losing money for years, will be closed soon.
Globally, Ford will probably survive, but it will be a very different company •